3. Determine the future value if $5,000 is invested in each of the following sit

Question

3. Determine the future value if $5,000 is invested in each of the following situation:( just need to answer one in a,b,c. thank you )
a. 5% for 10 years
b. 7% for 7 years
c. 9% for 4 years

4. You are planning to invest $2,500 today for 3 years at a nominal interest rate of 9% with annual compounding
a. What would be the future value of your investment
b. Now assume that inflation is expected to be 3% / years, over the same 3 years period. What would be the investment

Explanation / Answer

Begin with $100 - - - > 5 percent for 1 year - - > 105 then with each $1 - - - > 105/100 = 1.05 after 1 year Then for $5,000 it would be 5,000 * 1.05 after 1 year and then 5,000 * 1.05 * 1.05 after 2 year for 10 year investment it would be 5,000 * (1.05)^10 = $8144.473 Ans

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